Thursday, September 01, 2016
George Leef of Forbes reports that unaccountable bureaucrats at the SEC are preparing to saddle corporate boards with demographic quotas:
Back in 2009, the SEC instituted a requirement that publicly traded companies disclose plans they might have regarding the diversity of their boards of directors. That is to say, the racial, ethnic and gender characteristics of board members -- as if those attributes were the essential, defining attributes of a person.Leef goes on to indicate, correctly that rules about the demographic composition of corporate boards would "push [companies] into poor decisions" and fail at truly mimicking our nation's diversity, anyway. In addition, he echoes George Will's admonitions some time ago about bureaucratic autonomy.
But now SEC Chairman Mary Jo White has concluded that the earlier rule was too soft, leading only to vague disclosures about board diversity. As we learn in this Wall Street Journal editorial, she wants a new rule mandating that firms "include in their proxy statements more meaningful board diversity disclosures on their members and nominees."
Chairman White's idea dovetails with the thinking of Canadian law professor Aaron Dhir, who has been crusading for rules to compel companies to consider "the socio-demographic composition of their boards" and of Representative Carolyn Mahoney of New York, who wants the SEC to force companies to identify each member of their boards according to gender, race, and ethnicity. [links in original]
These things are all true, but the real problem is that it is wrong for the government to violate the rights of the individuals (e.g., who own and run businesses) to make their own decisions about whom to work with. Were we to constrain the government to its proper function, we wouldn't have to worry about it making companies obsess over every characteristic but the relevant one -- ability -- when making personnel decisions.